SB1933 96TH GENERAL ASSEMBLY

LRB096 11028 AJO 21321 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB1933

Introduced 2/20/2009, by Sen. A. J. Wilhelmi

SYNOPSIS AS INTRODUCED:

New Act

Creates the Homeowners' Association Bill of Rights Act. Provides that the Act applies to common-interest communities of single-family detached homes to protect homeowners with respect to actions by their association. Defines terms. Provides for homeowner rights: to protection against foreclosure by an association except under limited circumstances; to resolve disputes with an association without litigation through a fact-finding hearing, mediation, a time to cure a violation, and other provisions; to fairness in litigation by providing for a homeowner's attorney fees and limits on an association's attorney fees; to receive information about all association rules and charges, including disclosure before a home purchase is binding; to stability in an association's rules and charges, and limits on changes to the rules and charges; to individual autonomy concerning the display of flags and signs, peaceful assembly, use of common property, and limits on association documents; to oversight of associations and directors, including open records, open meetings, open voting, elections, and recalls; to vote on association matters and seek association office; and to reasonable discharge of responsibilities by associations and directors.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Homeowners' Association Bill of Rights Act.

Section 5. Application. This Act applies to common-interest communities of 200 or more single-family homes. The provisions protect homeowners with respect to actions by their association or its directors, officers, employees, managers, and other agents, but are not intended to alter the rights of homeowners or associations with respect to lenders, real estate agents, or developers.

Section 10. Definitions. In this Act:

"Common-interest community" means a real estate development or neighborhood in which individually owned lots or units are burdened by a servitude that imposes an obligation that cannot be avoided by non-use or withdrawal:

(i) to pay for the use of, or contribute to the maintenance of, property held or enjoyed in common by the individual owners; or

(ii) to pay dues or assessments to an association that provides services or facilities to the common property or to the individually owned property, or that enforces other servitudes burdening the property in the development or neighborhood.

"Homeowner" means the owner of property within a common-interest community.

"Association" means an organization, including homeowners as members, created to manage the property or affairs of a common-interest community.

"Common property" means property rights of an identical or a similar kind held by the homeowners as appurtenances to their individually owned lots or units.

"Declaration" means the recorded document or documents containing the servitudes that create and govern the common-interest community.

"Governing documents" means the declaration and other documents, such as the articles of incorporation or articles of association, bylaws, architectural guidelines, and rules and regulations that determine rights or obligations of homeowners or that otherwise govern the management or operation of an association.

Section 20. The Right to Resolve Disputes Without Litigation.

(1) Required Notice of Violation. Before an association may seek foreclosure, file suit, charge any fee (including attorney fees), limit common area use, or take other action against a homeowner for violation of governing documents, except for an emergency action as provided in subsection (8), the association must, in addition to compliance with other law and governing documents, do the following:

(a) Provide notice to the homeowner twice, at least 21 days apart, that (i) describes the basis for the claim, including how the homeowner allegedly violated quoted terms of the governing documents; (ii) states any amount the association claims is due, describes how the homeowner can remedy the violation, confirms the right to comply without waiving the right to dispute the violation, and gives notice of the right to request an installment plan for assessments; and (iii) states that the homeowner has a reasonable period to cure of at least 21 days after the second notice, unless the homeowner had an opportunity to cure a similar violation within the past 6 months, and that during the cure period the homeowner can obtain a hearing as provided in subsection (2) or mediation as provided in subsection (3), without incurring any attorney fees charged by the association.

(b) If the certified mail notice is not delivered, reasonably try to confirm the homeowner's current address and either re-send the notice as in subdivision (1)(a) or, if no other address can be found, reasonably try to hand-deliver the notice, the period to cure starting anew from this notice.

(2) Right to a Hearing. After notice of subdivision (1)(a), a homeowner has the right at no cost to a hearing to verify facts and seek resolution with the directors or a committee designated by the directors. If the directors use a committee, any agreement must be enforceable, to be ratified by the directors unless it conflicts with law or the governing documents, and the homeowner must be allowed to appeal to the directors. In addition:

(a) The association shall hold the hearing within 30 days after the association receives the homeowner's request and shall provide notice of the date, time, and place at least 10 days before the hearing; the homeowner may request postponement, which shall be granted if for not longer than 10 days; additional postponements may be granted by written agreement of the parties; the homeowner may record the meeting; and the committee (and, on any appeal, the directors) shall issue a written decision including the notice required by subsection (4); and

(b) The association shall extend the period to cure under subdivision (1)(a)(iv) until 15 days after notice of the written decision by the committee or directors, whichever is later.

(3) Right to Confidential Mediation. After notice given under subdivision (1)(a), except with respect to disputes involving only an assessment or small monetary charge, less than $1,000, a homeowner shall have the right to one-half day of neutral mediation, with the proceedings to be kept confidential and not admissible in court except as provided by State law. The requesting homeowner shall pay 50% of the mediator's charge and the association shall pay the balance. If, after 30 days, the parties cannot agree on a mediator, the homeowner shall have the right to file an action against the association. If the parties agree on a mediator, the association shall extend the period to cure under subdivision (1)(a)(iv) until 15 days after the mediation.

(4) Right to Options. After receiving notice of a decision under subsection (2), a homeowner shall have the right, within 15 days, to invoke the procedure of subsection (3). The notice of decision under subdivision (2)(b) shall specify this right.

(5) Right to Extend Time to Cure. During the period to cure as provided in subsection (1), as extended in subsection (2) or (3), the association shall not incur attorney fees chargeable to the homeowner, and shall not take any enforcement action except for emergency action allowed by subsection (8).

(6) No Lawsuit Without Directors Voting. No association may sue a homeowner without an authorizing vote by a majority of all directors, in compliance with applicable law and governing documents that may set super-majority vote or other requirements.

(7) Notice before Litigation. Except for emergency action allowed by subsection (8), the association must provide distinct notice at least 15 days before filing suit against a homeowner, that:

(a) describes the basis for the suit, including how the homeowner allegedly violated specified terms of the governing documents; and

(b) states any amount the association claims due, describes how the homeowner can cure the violation, and gives notice of the right to request an installment plan for assessments.

(8) Exception for Emergencies. Nothing precludes an association from seeking a temporary injunction, or taking temporary enforcement action, in a good faith response to an emergency. An emergency is a situation that could not have been reasonably foreseen, poses a significant and immediate threat to the common-interest community. Any temporary enforcement action entitles the homeowner to immediate notice and the related rights, provided enforcement action may remain in place pending (a) the final determination of homeowner rights or (b) the end of the conditions resulting in the immediate and significant threat, whichever comes sooner.

(9) No Additional Charges, but Additional Options Allowed. No association may charge homeowners for exercise of their rights under this Act, but an association may offer additional options for alternative dispute resolution (ADR); however, no association may require binding ADR, otherwise require a homeowner to waive the right to go to court, or bill a homeowner for mandatory ADR. In any litigation, if a party moves to compel nonbinding ADR, the court may consider the extent to which the parties already have pursued ADR.

(10) Annual Notice of Rights to Alternative Dispute Resolution. Once each year, each association shall alert homeowners of their rights to ADR, including statutory rights and any others available under subsection (9).

Section 25. The Right to Fairness in Litigation.

(1) Judicial Protection. Individual homeowners may sue an association to enforce statutory rights as well as their rights under this Act or governing documents, without being required to sue other homeowners; further, the association shall pay for any notice to homeowners that the court finds to be appropriate. Governing documents shall not limit judicial review or court enforcement; however, they may require ADR to the extent permitted by Section 20.

(2) Compliance Under Protest. Homeowner compliance with an association's demand for action, or demand to cease action, including but not limited to any demand to pay assessments or attorney fees, does not waive homeowner rights to challenge such demand.

(3) Protected Homeowner Rights to Attorney Fees. In any case brought by an association or homeowner to enforce governing documents or applicable law, the homeowner shall be awarded reasonable attorney fees and costs to the extent that the homeowner prevails. Attorney fees shall reflect counsel's reasonable hourly rate and time worked, and shall not be limited by the amount the homeowner actually paid, if any.

(4) Limited Association Rights to Attorney Fees. In any case brought by an association or homeowner to enforce governing documents or applicable law, if authorized by the declaration, the association shall be awarded reasonable attorney fees and costs to the extent that the association prevails; however, the reasonable attorney fees may be reduced at the discretion of the court based on a finding that the judicial review benefited the association or homeowners by clarifying governing documents or applicable law, or other equitable considerations. Attorney fees shall reflect counsel's reasonable hourly rate and time worked, limited by the amount the association actually paid.

Section 30. The Right to Be Told of All Rules and Charges.

(1) Governing Documents. An association may not enforce charges or other rules against homeowners, except those set forth in plain English in governing documents. All operating rules shall be compiled in a single document, available to homeowners on request.

(2) Disclosure to Buyers. Unless otherwise provided by statute, the following provisions apply:

(a) At least 3 days before an offer to buy a home becomes binding, the homeowner shall furnish the potential buyer with: (i) all the association's governing documents, excluding plats and plans; (ii) a statement of each existing assessment, any unpaid assessment currently due from the selling homeowner, and any other alleged violation of the association's governing documents by external features of the home or landscape as of the date of the certificate, citing applicable rules; (iii) the association's current operating budget and financial statement, including any legally required summary of the association's reserves; and (iv) a statement of the number of foreclosure lawsuits filed within the past 3 years, any unsatisfied judgments, and pending legal actions against the association or otherwise relating to the common-interest community of which the selling homeowner has actual knowledge.

(b) Upon a homeowner's request, within 10 days the association shall furnish a certificate with the information specified in subdivision (2)(a). A requesting homeowner is not liable for erroneous information in the certificate. A buyer is not liable for any past assessment, any future assessment greater than stated in the certificate, unless lawfully increased after the sale, or for violations of governing documents by external features of the home or landscape not stated in the certificate. For this certificate, the association may charge only actual costs, not to exceed $1 per page.

(c) Upon request by a homeowner, potential buyer in receipt of a certificate pursuant to subdivision (2)(b), or homeowner's or buyer's authorized agent, within 7 days the association shall make any legally required study of the association's reserves reasonably available to copy and audit.

(3) Limits on Default and Implied Powers. Governing documents, and statutes governing homeowners, shall be construed to favor homeowners' free and unrestricted use of their homes, and against any person seeking to enforce a limit on homeowner rights.

(a) Absent specific authorization in the declaration or in subdivision (3)(b) or subdivision (3)(c), an association does not have power to adopt any rules that restrict the use or occupancy of, or behavior within, individually owned homes.

(b) Except as limited by statute or the governing documents, an association has implied power to adopt reasonable operating rules to govern the use of (i) common property and (ii) individually owned property to protect the common property.

(c) If the declaration grants a general power to adopt rules, an association also has power to adopt reasonable operating rules designed to: (i) protect homeowners from unreasonable interference in the enjoyment of their individual homes and the common property caused by use of other individually owned homes; and (ii) restrict the leasing of homes to meet valid underwriting requirements of institutional lenders.

(d) Except to the extent provided by statute or authorized by the declaration, a common-interest community may not impose restrictions on the structures or landscaping that may be placed on individually owned property, or on the design, materials, colors, or plants that may be used.

(e) An association may borrow money subject to any limits stated in the governing documents but, unless the declaration or a court-approved order grants specific authority, the association may not assign future revenues or create a security interest in common property without approval by 51% of all homeowners (or more if required by governing documents) in a vote after at least 30 days' notice.

Section 35. The Right to Stability in Rules and Charges.

(1) Seniority of Documents. In resolving any conflict among governing documents, the senior document controls.

(2) Homeowner Powers to Amend Governing Documents. For any governing document, the following apply:

(a) Except as limited by the governing document, a senior document, or statute, homeowners have the power to amend subject to the following requirements:

(i) Unless the governing document, a senior document, or statute specifies a different number, an amendment adopted by homeowners holding a majority of the voting power is effective to:

(a) extend the term of the governing document;

(b) make administrative changes reasonably necessary for management or administration of the common property; or

(c) prohibit or materially restrict uses of individually owned homes that threaten to harm or unreasonably interfere with reasonable use and enjoyment of other property in the community, or to amend or repeal such prohibition or restriction adopted by amendment under this subdivision (2)(a)(i)(c).

(ii) Unless the governing document, a senior document, or statute specifies a different number, an amendment adopted by homeowners holding two-thirds of the voting power is effective for all other lawful purposes except as stated in subdivisions (2)(b) and (2)(c).

(b) Amendments that do not apply uniformly to similar homes and amendments that would violate association duties to homeowners under this Act are not effective without approval by homeowners whose interests would be adversely affected, unless the declaration clearly and specifically apprises purchasers that such amendments may be made. This subdivision (2)(b) does not apply to non-uniform modifications made under circumstances that would justify judicial modification.

(c) Except as otherwise expressly authorized by the declaration, and except as provided in subdivision (2)(a), unanimous homeowner approval is required to (i) prohibit or materially restrict the use or occupancy of, or behavior within, individually owned lots or units or (ii) change the basis for allocating voting rights or assessments among homeowners.

(d) At least 60 days before voting on any proposed amendment to a governing document, the association shall provide notice to all homeowners, including the specific text proposed and a description of the amendment's purpose and anticipated effects. No amendment takes effect before the association provides notice of adoption to all homeowners, certified by an association officer, and to the extent required by law, the association records the amendment.

(e) Directors have no power to amend a governing document except where expressly authorized by statute or, where not otherwise contrary to statute, expressly authorized by the governing document or a senior document; provided that, if governing documents authorize directors to impose any duty or charge on homeowners, this shall be done by operating rule unless the governing document requires otherwise; and provided further that homeowners only, not directors, shall have power to amend:

(i) any provision that affects number, qualifications, powers and duties, terms of office, or manner and time of election or removal of directors; or

(ii) any provision with respect to amendment of any governing document.

(3) Limits on Operating Rule Changes by Directors. Directors may adopt, amend, or repeal operating rules only if all of the following requirements are satisfied:

(a) All operating rules must be:

(i) in writing;

(ii) within directors' authority conferred by law or corporate documents;

(iii) not inconsistent with law and corporate documents;

(iv) adopted, amended, or repealed in good faith and in substantial compliance with this Act; and

(v) reasonable.

(b) Subdivisions (3)(d) and (3)(e) apply only to operating rules that relate to one or more of the following subjects:

(i) use of common property;

(ii) use of a home, including any aesthetic or architectural standards that govern alteration of a home;

(iii) homeowner discipline, including any withdrawal of privileges or charges for violating governing documents and any procedure for withdrawing privileges or imposing charges;

(iv) any standard for delinquent assessment installment or other payment plans;

(v) any procedure to resolve disputes;

(vi) any procedure for reviewing and approving or disapproving a proposed physical change to a home or to the common area; and

(vii) any procedure for elections.

(c) For the following actions by directors, subdivisions (3)(d) and (3)(e) do not apply:

(i) a decision regarding maintenance of the common property;

(ii) a decision on a specific matter that is not intended to apply generally;

(iii) a decision setting the amount of a regular or special assessment;

(iv) a rule change required by law, if directors have no discretion as to the substantive effect of the rule change; and

(v) issuance of a document that merely repeats existing law or the governing documents.

(d) Directors shall provide written notice of a proposed rule change to homeowners at least 30 days before making the rule change. The notice shall include the text, and a description of the purpose and effect of the proposed rule change, except as provided by subdivision (3)(d)(iii).

(i) A decision on a proposed rule change shall be made at a meeting of the directors, after consideration of any comments made by homeowners.

(ii) Not more than 15 days after making the rule change, the directors shall deliver notice of the rule change to every homeowner. If the rule change is an emergency rule change made under subdivision (3)(d)(iii), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires.

(iii) If directors determine that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, directors may make an emergency rule change; and no prior notice is required. An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this subdivision (3)(d)(iii) may not be readopted under this paragraph.

(e) Homeowners holding 5% of the voting power may call a special meeting of the homeowners to reverse any rule change.

(i) To call such special meeting homeowners must, no more than 30 days after being notified of a rule change, deliver a written request to the association's president, secretary, or registered agent, after which the directors shall give notice of the meeting to all homeowners. Homeowners are deemed notified of a rule change after receiving notice of the rule change or enforcement of the resulting rule, whichever happens first. Homeowner requests to copy or review association member lists with addresses, e-mail, and phone numbers for the purpose of seeking support to reverse a rule change shall be honored as soon as reasonably possible, in any event within 3 business days. Homeowners shall be allowed to use common property reasonably in seeking support to reverse a rule change.

(ii) At such special meeting with a quorum present, the rule change shall be reversed by majority vote of homeowners represented and voting, unless a corporate document or statute requires otherwise.

(iii) Unless otherwise provided by the corporate documents, for this subdivision (3)(e), one vote may be cast for each home.

(iv) Special meetings under this subdivision (3)(e) shall follow laws generally applicable to special meetings.

(v) A rule change reversed under this subdivision (3)(e) may not be readopted for one year after the date of the meeting reversing the rule change. Nothing in this subdivision (3)(e) precludes directors from adopting a different rule on the same subject as a rule change that has been reversed.

(vi) As soon as possible and not more than 15 days after the close of voting at a special meeting, the directors shall provide every homeowner with notice of the results of a vote held pursuant to this subdivision (3)(e). This subdivision (3)(e) does not apply to emergency rule changes under subdivision (3)(d)(iii).

(4) Required Notice for Homeowner Votes on Assessments. Unless governing documents require a longer period, homeowner votes to impose or increase regular or special assessments require at least 30 days' advance notice.

Section 40. The Right to Individual Autonomy.

(1) Signs and Flags. Homeowners have the right to display noncommercial signs, flags, religious objects, and "for sale" signs on their property; however, the declaration may set reasonable limits so long as, for 3 months before any election or other vote held by an association, government, or other entity with geographic territory overlapping any part of a common-interest community, the association does not forbid display of reasonable-size signs relating to the election or vote.

(2) Neighbor Contacts. Homeowners have the right peacefully to visit, telephone, petition, or otherwise contact their neighbors; however, the declaration may set reasonable restrictions if it permits some weekday afternoon and some weekend hours for such neighbor contacts.

(3) Peaceful Assembly. Homeowners have the right to invite guests to assemble peacefully on their property; however, the declaration may set reasonable limits to protect nearby homes.

(4) Common Property. Where an association makes any part of common property available for use by homeowners:

(a) the governing documents shall state any charge for homeowners' use, which shall not exceed the association's marginal cost for use, as well as any other restrictions on such use, which shall be content-neutral and otherwise reasonable; and

(b) the governing documents shall not unreasonably restrict homeowners' rights to invite public officers or candidates for public office to appear or speak in common areas, or unreasonably restrict lawful uses relating to an election or other vote held by the association or any government or quasi-governmental entity with geographic territory overlapping any part of the common-interest community.

(5) Discrimination Prohibited. Restrictions on signs and flags, neighbor contacts, peaceful assembly, common property, or other self-expression shall not differ based on the content of a view sought to be expressed by a homeowner. If an association allows homeowners to express views on a topic, in a newsletter or other forum, other homeowners equally shall be allowed to respond with differing views.

(6) No Forced Membership in Another Organization. An association may not force a homeowner to join a separate organization unless (a) expressly authorized by the declaration before the homeowner's purchase or (b) associations merge in compliance with State law.

(7) No Mandatory Charitable or Political Funding. Assessments or other mandatory dues from association members may not be used by the association for charitable or political purposes. Any solicitations for charitable or political purposes by an association must be conducted separately from the billing for customary assessments of fees, and clearly be designated as voluntary.

(8) Ultimate Limit on Governing Documents. Governing documents must be created in compliance with law, and not include terms that are illegal or unconstitutional, or that violate public policy. Terms that are invalid because they violate public policy include, but are not limited to, terms:

(a) that are arbitrary, spiteful, or capricious;

(b) that unreasonably burden a fundamental constitutional right;

(c) that impose an unreasonable restraint on alienation;

(d) that impose an unreasonable restraint on trade or competition; or

(e) that are unconscionable.

Section 45. The Right to Oversight of Associations and Directors.

(1) Open Records. All association meeting minutes, financial and budget materials, contracts, court filings, and other records must be maintained for at least 4 years at the association's main business office or other suitable location near homes in the association.

(a) Except as provided in subdivision (1)(b), the association must make all records available for homeowners or their authorized agents to inspect and copy such materials. Such copying shall be permitted during regular working hours, within 10 days of a written request without requiring a statement of purpose or reason and at a reasonable cost.

(b) Documents protected by the attorney-client privilege or as work product are exempt from disclosure to the same extent as they would be in litigation, as are contracts being negotiated. The following records also are exempt from disclosure to homeowners or their agents, except upon court order for good cause shown, provided that such records shall be kept confidential except upon court order for good cause shown:

(i) staff personnel records, except the association shall make available under subdivision (1)(a) records of time worked and salary and benefits paid; and

(ii) records of homeowners other than the requester, except the association shall make available under subdivision (1)(a) the list of homeowners with their mailing addresses and a compilation of violations of the governing documents, other than for nonpayment of an assessment, and this compilation must:

(a) describe the violation alleged and the sanction sought or imposed; and

(b) not identify the person against whom the sanction was sought unless the matter was considered in an open meeting or court.

(c) If an association refuses to allow a homeowner or a homeowner's agent to review records as provided in this Section, the requester is entitled to an immediate injunction, a penalty of $500, or in the court's discretion, more, and attorney fees, even if the association makes records available after the filing of an action in the circuit court for the release of the records.

(d) Any director may inspect any association records, except attorney-client privileged or work product records concerning potential, ongoing, or past litigation against the director. In addition to their rights under subdivision (1)(a), directors may make copies of minutes of any meeting during their term of office, and of any other document for purposes reasonably related to their duties as directors.

(e) Pending litigation does not reduce the rights provided in this Act.

(2) Quarterly Review. Every 90 days, or more frequently if required by governing documents, the directors shall review at one of the association meetings:

(a) the latest statements from financial institutions that hold association accounts;

(b) current reconciliations of the association's operating and reserve accounts;

(c) a year-to-date income and expense statement for association operating accounts, compared with the budget;

(d) year-to-date revenues and expenses for the reserve account, compared with the budget; and

(e) the status of any lawsuit, arbitration, or mediation involving the association.

(3) Open Meetings. Except for executive sessions, homeowners may attend, record, and (subject to reasonable limits) speak at any meeting of the association or its directors.

(a) Directors may meet in executive session only to:

(i) approve, modify, terminate, or take other action regarding a contract between the association and an attorney;

(ii) consult with counsel on litigation or otherwise to obtain legal advice, if the discussion would be protected by attorney-client privilege;

(iii) discuss the character, alleged misconduct, professional competence, or physical or mental health of an association manager or employee;

(iv) discuss a homeowner's failure to pay an assessment or other alleged violation of governing documents, except as provided in subdivision (3)(b); or

(v) discuss ongoing contract negotiations.

(b) Directors shall use executive session to discuss alleged violations of governing documents unless the person who may be sanctioned requests an open meeting in writing. The person who may be sanctioned may attend and testify at any hearing concerning the alleged violation, but has no right to attend director deliberations.

(c) Meeting minutes shall note generally any matter discussed in executive session.

(4) Open Voting. All votes by directors shall be recorded in the minutes available to all homeowners, except to the extent permitted by subsection (3). Directors may not vote by proxy or by secret ballot, except a secret ballot to elect officers. This rule also applies to any committee or agent of the association that makes final decisions to spend association funds, or approve or disapprove architectural decisions.

(5) Special Meetings. In addition to any provisions for special meetings in the governing documents, the directors shall provide 5 days' notice and convene a special meeting of the association to be held no less than 5 days and no more than 10 days after the chair, the secretary, or the association's registered agent receives a petition stating one or more purposes for such meeting and signed by homeowners holding 10% of the voting power, unless other law or the corporate documents state a different percentage. The petition may specify a person to chair the special meeting. Each purpose and, if specified in the petition, the chair of such special meeting shall be stated in its notice.

Section 50. The Right to Vote and Run for Office.

(1) Voting Rights. No association may deny a homeowner's right to vote on any issue that affects an assessment or other provision of governing documents that apply to the membership class of the homeowner.

(a) For a home with multiple owners, unless expressly provided by the declaration: if only one owner seeks to vote, that owner votes for the home; but if more than one owner seeks to vote, votes must be allocated by agreement of a majority of the home's owners or, absent agreement, co-owners shall split votes in proportion to their ownership interest. Agreement exists if any homeowner votes without another homeowner protesting either before the vote in writing or, at the vote, promptly to the person presiding over the vote.

(b) No vote may be cast except by the homeowner or, where permitted by law and the governing documents, by a person holding a proxy. The following requirements apply to a proxy:

(i) The proxy must be dated and designate a meeting for which it applies.

(ii) The proxy may not be revocable without notice, and may be revoked only by actual notice to the person presiding over the meeting.

(iii) The proxy must designate each specific agenda item to which it applies, except a homeowner may execute a proxy without designating any item if used solely to determine whether a quorum exists. For each specific agenda item designated, the proxy must specify a vote for or against the proposition or, in an election, state a specific position regarding whom to vote for. If a proxy does not state proper instructions to vote on an item, the proxy must be treated as if the homeowner were present but not voting on that item.

(iv) When a holder casts proxy votes, the holder must disclose the number of proxies held, and the proxies must be kept as part of the public record of the meeting for the period provided by law.

(v) Association governing documents may provide for homeowner proxy voting by absentee ballot, with the ballot as specific as any other proxy, and with the association's secretary to announce the number of such ballots received for each vote at the meeting, and the ballots kept as part of the public record of the meeting.

(c) Votes allocated to homes owned by the association may not be cast, by proxy or otherwise, for any purpose.

(2) Candidacy. No homeowner may be denied the right to run for office.

(a) Unless a person is appointed by the developer, the person may not serve as director or officer if the person or any relative serves as manager for the association or, if a master association, manager of any association that is subject to the governing documents of the master association.

(b) Each candidate named on a ballot for director must make a good faith effort to disclose in writing, by actual notice to all homeowners or as otherwise provided in the corporate documents, any financial, business, professional, or personal relationship or interest that would appear to a reasonable person to result in a potential conflict of interest if the candidate were elected director.

(c) Notice of which positions will be on the ballot in the next election and what the deadline for filing for such positions is shall be submitted to each homeowner between 20 and 45 days before the filing deadline. An election shall not be held until at least 30 but no more than 60 days after filing deadline.

(3) Voting Procedure. Unless State law sets different requirements, and if not otherwise specified by corporate documents, a quorum exists if homeowners with 25% of the voting power attend or, where permitted, are present by proxy at a meeting; provided, where only a specified class may vote on a particular issue, a quorum to vote on that matter requires 25% of the voting power of that class. At any meeting, election of directors, recalls, and homeowner votes on assessments, amendments to governing documents, operating rules, or other matters shall be conducted by secret ballot (except as provided with respect to proxies in subdivision (1)(b)), with all ballots kept as part of the records of the election for the period provided by law.

(4) Access to Forums. If any candidate for an election, or homeowner advocating a point of view for purposes reasonably related to a homeowner vote, is permitted to use a forum that is paid for by the community (such as a newsletter, bulletin board, or meeting area) to promote his or her candidacy for a board election, then other candidates and homeowners shall also be permitted equal access to the same forum under the same conditions.

Section 55. The Right to Reasonable Associations and Directors.

(1) Duties of Associations. In addition to compliance with law and governing documents, an association, whether acting through directors, officers, managers, or other agents, by homeowner vote, or otherwise, has the following duties to its homeowners:

(a) to use ordinary care and prudence in managing property and financial affairs;

(b) to treat homeowners fairly; and

(c) to act reasonably in the exercise of discretionary powers, including rule-making, enforcement, and design-control powers.

(2) Duties of Directors, Officers, Managers, and Other Agents. In addition to compliance with law and governing documents, association directors, officers, managers, and other agents must act in good faith, deal fairly with the association and its homeowners, and use ordinary care and prudence in performing their functions.

(a) A director, officer, attorney, manager, or other agent of an association shall not solicit or accept any form of compensation, gratuity, or other remuneration that:

(i) would improperly influence or would appear to a reasonable person to improperly influence the decisions made by such agent; or

(ii) would result or would appear to a reasonable person to result in a conflict of interest for such agent.

(b) Unless appointed by the developer, a director or an officer of an association shall not:

(i) enter into or renew a contract with the association to provide goods or services to the association; or

(ii) otherwise accept any commission, personal profit, or compensation of any kind from the association for providing goods or services to the association.

(3) Protection Regarding Attorneys. In contracting for a lawyer to seek foreclosure or take other enforcement action, no association may make legal fees in whole or part contingent on the amount paid (for fees or otherwise) by a homeowner. Any homeowner payment to the lawyer shall be held for the association. No contract may authorize anyone to prevent a homeowner from seeking to resolve any dispute directly with directors or other agents of an association.

(4) Protection Regarding Managers. All association managers must be licensed and bonded where required by law. In contracting with managers, an association may pay a flat fee, hourly rates, or a combination of flat fees and hourly rates. Managers may not be paid any fee, bonus, incentive, or other amount based on the number or value of violations they allege or address. Managers may not impose charges on homeowners, except where reasonable and expressly authorized by governing documents. All homeowner payments to the manager shall be held for the association.

(5) Determination of Architectural Requests. A homeowner's request that the association or related architectural body approve the homeowner's planned construction, landscaping, maintenance, or repairs shall be deemed approved unless, within 30 days or such other period as the declaration may specify, the association or architectural body provides written notice specifically detailing a lawful basis for disapproval in whole or part. Such notice shall specify that homeowners have the right to reconsideration by the directors, unless the directors collectively made the original decision. Each year the association in writing shall remind homeowners that rules govern approval of construction, landscaping, maintenance, or repairs.

(6) Retaliation Specifically Forbidden. No association, director, officer, manager, or other agent of an association may take, or direct, or encourage another person to attempt retaliatory action against a homeowner because the homeowner has:

(a) complained about alleged violations of law or governing documents;

(b) requested to review books, records, or other papers of the association; or

(c) taken any other lawful action asserting homeowner rights or otherwise seeking to improve association operations. The retaliatory forbidden action includes, without limitation, ill-motivated litigation as well as deprivation of other rights protected by law or governing documents.

(7) Remedies. In addition to other remedies authorized by this Act or other law, homeowners are entitled to recover compensatory and, for intentional violations, punitive damages from an association and its directors, officers, managers, or other agents who act unlawfully. In addition, upon proof of intentional violations by directors, officers, managers, or other agents of the association, homeowners are entitled to appropriate relief in equity including, without limitation, removal of offenders from positions with the association, a bar against their return to office for a specified time, and an order requiring the offender to repay the association for expenses including legal fees.